Method of cost effectively funding a loan

Abstract

A method of achieving cost effective funding by providing a financial guaranty in the form of reinsurance to an insurance company to insure the lender's or a third party's loans. The financial guaranty enables the lender (i.e., the originator of the loan) or a third party to retain a first loss on a pool of assets such as, for example, a pool of loans underwritten by the lender or third party. The financial guaranty preferably provides sufficient coverage for loan losses that may occur due default of a loan or a pool of loans and induces an insurer to issue the insurance.

What is claimed is:  
     
         1 . A method of cost effectively funding a loan, said method comprising the step of providing, by a lending institution, a financial guaranty to an insurance company as a first loss protection for the loan as an enticement to the insurance company to insure the loan.  
     
     
         2 . A method as recited by    claim 1   , wherein the lending institution comprises a lender and a reinsurer, and wherein the financial guaranty is reinsurance provided by the reinsurer, and wherein the loan is a loan of the lender.  
     
     
         3 . A method as recited by    claim 1   , wherein the lending institution comprises a lender and a reinsurers and wherein the financial guaranty is reinsurance provided by the reinsurer, and wherein the loan is a loan of a third party.  
     
     
         4 . A method as recited by    claim 1   , wherein the loan comprises a pool of loans.  
     
     
         5 . A method as recited by    claim 1   , wherein the loan is transferred by the lending institution to an entity that issues a note to obtain funding for the loan, and wherein the note is insured by the insurance company.  
     
     
         6 . A method as recited by    claim 5   , wherein the entity comprises a bankriuptcy-remote entity and a trust.  
     
     
         7 . A method as recited by    claim 5   , wherein the lending institution comprises a lender and a reinsurer, and wherein the financial guaranty is reinsurance provided by the reinsurer, and wherein the loan is a loan of the lender.  
     
     
         8 . A method as recited by    claim 5   , wherein the lending institution comprises a lender and a reinsurer, and wherein the financial guaranty is reinsurance provided by the reinsurer, and wherein the loan is a loan of a third party.  
     
     
         9 . A method of cost effectively funding a loan, said method comprising the steps, by a lending institution, of: 
 (a) providing a computer connectable to a network and having a processor operable in connection with software for: 
 receiving information from a borrower for a loan request;  
 determining a credit risk of the borrower from the information received;  
 approving or rejecting the loan request based on the determined credit risk;  
   (b) transferring the loan to an entity that issues a note to obtain funding for the loan, the note being insured by another entity; and    (c) providing a financial guaranty to the another entity for the note.    
     
     
         10 . A method as recited by    claim 9   , wherein the lending institution comprises a lender and a reinsurer, and wherein the financial guaranty is reinsurance provided by the reinsurer, and wherein the another entity is an insurance company, and wherein the loan is a loan of the lender.  
     
     
         11 . A method as recited by    claim 9   , wherein the lending institution comprises a lender and a reinsurer, and wherein the financial guaranty is reinsurance provided by the reinsurer, and wherein the another entity is an insurance company, and wherein the loan is a loan of a third party.  
     
     
         12 . A method as recited by    claim 9   , wherein the entity comprises a bankruptcy-remote entity and a trust.  
     
     
         13 . A method as recited by    claim 8   , wherein the another entity is an insurance company.